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National Air Express

1. The productivity measure of shipments per day per truck is still useful, but it needs to be factored together with the customer service standards that Smith wants incorporated. Rather than shipments per day per truck, he might choose to measure productivity in terms of dollars per day per truck or cumulative dollars for each customer. For example, the fact that a truck has 20 shipments per day is not as useful as knowing that Customer A ships items virtually every workday, while Customer B ships items approximately once a month. If Smith tracks the frequency of shipment per customer and factors in the dollars of profit he is making, he will arrive at a more useful measure of profitability that can tell him whether he can afford to¨and should¨increase his costs for more trucks and drivers.

On the other hand, Smith might consider changing the way he is operating in lieu of adding more trucks and drivers. He might be able to reorganize his pick-up and delivery services to permit fewer drivers to service customers more efficiently. Rather than having a driver give the customer boxes